Deputy Prime Minister Choo Kyung-ho: "Previous Government's Economy 'Lax'... Process of Normalization"

Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho evaluated the economic policy of the Yoon Suk-yeol administration on the 10th (local time) as a process of normalizing abnormalities and sharply criticized the previous administration. He forecasted that South Korea's economic growth rate this year would follow a pattern of low in the first half and high in the second half, remaining around the initially projected 1.6% level.

Visiting the United States to attend the G20 Finance Ministers and Central Bank Governors Meeting, Deputy Prime Minister Choo met with correspondents in Manhattan, New York, and stated, "The reason why economic management is very difficult right now is, first, the external environment, and second, because policies must be implemented in the process of normalizing abnormal situations."

[Image source=Yonhap News]

As the first economic chief of the Yoon Suk-yeol administration, Deputy Prime Minister Choo opened up about his policy approach and impressions since taking office, saying, "(The previous administration) established and operated lax economic policies. (After taking office) I thought this part needed to be thoroughly normalized."

As a career economist and bureaucrat, he criticized, "There were problems in the way economic management was conducted in terms of fiscal operations, household debt, housing prices, and approaches to housing prices under the previous administration," adding, "Even when supplementary budgets were passed several times a year and fiscal spending increased by 18-19%, they casually expressed sentiments like 'Why can't we spend more money?'" He pointed out that while expansionary fiscal policy should be implemented when necessary, there was a lack of caution regarding fiscal soundness and sustainability during this process.

He also noted, "(Under the previous administration) household debt increased excessively. Real estate measures also introduced 'punitive taxation' excessively under the logic of taxing the wealthy, which was unrelated to the essence of the issue," and added, "(Currently) we are in the process of correcting such management." The household loan growth rate, which once soared to double digits, has recently turned negative. However, Deputy Prime Minister Choo added that caution remains high due to the overall high level of household debt.

He sighed, saying, "Simply put, it would be better if there was more leeway in household loans during somewhat difficult times, but since we have to operate policies in this situation, it is like walking on thin ice." He continued, "It is a path toward normalization, but (due to the macroeconomic environment, etc.) the pace is realistically slower," adding, "It will take some time."

When asked to evaluate the Korean economy, Deputy Prime Minister Choo avoided a direct answer, saying, "Can you ask a student to grade themselves?" However, he emphasized, "We are always striving for a perfect score of 100." Amid ongoing global recession concerns, he also acknowledged worries about tax revenue shortages. Deputy Prime Minister Choo said, "(Tax revenue) is not good," adding, "Corporate earnings in the fourth quarter were not good, and we have repeatedly said since last year that our economic outlook for the first half will not be favorable." These concerns have also been confirmed through the government's previously disclosed national tax revenue status. Deputy Prime Minister Choo has consistently stated that this year's growth rate will show a low-high pattern around 1.6%.

However, looking at key indicators reflecting the recent domestic economic situation, many still show a downward or slowing trend. Deputy Prime Minister Choo noted, "There are many variables. Even in the U.S., various forecasts are emerging," and "It is clear that China is no longer providing a quick rebound opportunity for us as it did in the past," highlighting external variables. Regarding recent exchange rate movements, he diagnosed, "Although there are fluctuations, there is no problem with external credibility," and said, "It is within the normal range."

Deputy Prime Minister Choo will hold consecutive meetings with executives from Blackstone, BNY Mellon, and Goldman Sachs in New York until the 11th. At these meetings, he plans to explain the Korean economic situation and the government's response, while emphasizing the soundness of domestic financial institutions and the stability of the foreign exchange and financial markets. Following this, he will attend the G20 meeting held in Washington DC in conjunction with the International Monetary Fund (IMF) and World Bank (WB) spring meetings. Deputy Prime Minister Choo said, "There is no particular place that evaluates the Korean economy as especially risky or unstable," but added, "We always remain vigilant because if the U.S. or others become unstable, it could transform in some way and affect us."

Amid numerous variables surrounding the macroeconomy and pressing economic challenges, just before leaving after the meeting that day, Deputy Prime Minister Choo picked up a 'fortune cookie' whose message was simple and clear: ‘Don`t find fault, find a remedy.’

This content was produced with the assistance of AI translation services.